In this 1969 work, Henry Hazlitt explains why politicians who promise salvation through government are dangerous. Among the essays: Instant Utopia | Salvation Through Government Spending | "We Owe It to Ourselves" | Consequences of Dollar Debasement | The High Cost of Wage Hikes | Price Controls | More on Price Controls | Who Protects the Consumer? | Famines Are Government-Made | Runaway Relief and Social Insecurity | Income Without Work | Fallacies of the Negative Income Tax | Can We Guarantee Jobs? | Soaking the Rich | Soaking the Corporations | Government Planning vs. Economic Growth | Government as Prosperity-Maker | Uruguay: Welfare State Gone Wild | Inflation Is Worldwide | The Case for the Gold Standard | The Fallacy of Foreign Aid | Government Unlimited | From Spencer's 1884 to Orwell's 1984 | The Task Confronting Libertarians | What We Can Do About It
Salvation Through Government Spending
In the early 1930s, in the depth of the Great Depression, the theory became fashionable that the cause of all depressions was Lack of Purchasing Power. The people just did not have enough money, and because of unwarranted pessimism they were refusing to spend enough even of what they had.
The solution was therefore simple: at such a time the government should boldly increase its own spending, ""prime the pump,"" and ""get things moving again.""
""One mark of the welfare state everywhere has been the gathering of power into the hands of one man.""
Naive advocates of this theory assumed that more government spending was the whole answer. The more sophisticated advocates saw that the increased spending would not give people more purchasing power if the government kept the budget balanced and took it all away again in higher taxes. The thing to do was to spend more without taxing more. The trick, in other words, was deliberately to unbalance the budget — to run a deficit.
Most of the champions of deficits — including the eminent John Maynard Keynes himself, the theory's chief architect — at least publicly professed to believe that the required deficit could be financed by selling bonds directly to the public, to be paid for out of savings. But again, the more sophisticated deficiteers must have seen that a man who buys a $1,000 bond out of his savings surrenders that much purchasing power for the life of the bond. In short, he loses just as much buying power as the government gains. On net balance, no new buying power has been created.
Henry Stuart Hazlitt (November 28, 1894 – July 9, 1993) was a libertarian philosopher, an economist, and a journalist for various publications including The Wall Street Journal and The New York Times, and Newsweek. He was the founding vice-president of the Foundation for Economic Education and an early editor of The Freeman magazine, an important libertarian publication. In 1946 Hazlitt wrote Economics in One Lesson, his seminal text on free market economics, which Ayn Rand referred to as doing a "...magnificent job of theoretical exposition." Hazlitt is credited with bringing his ideas and those of the so-called Austrian School to the American economics scene and his work has influenced the likes of economist Ludwig von Mises, novelist and essayist Ayn Rand, and 2008 Libertarian Party Presidential nominee and congressman, Ron Paul.
Hazlitt was a prolific writer, authoring 25 works in his lifetime.
Ludwig von Mises said at a dinner honoring Hazlitt: "In this age of the great struggle in favor of freedom and the social system in which men can live as free men, you are our leader. You have indefatigably fought against the step-by-step advance of the powers anxious to destroy everything that human civilization has created over a long period of centuries... You are the economic conscience of our country and of our nation."